Sales tax exemption for renewable energy equipment proposed

Wind turbines and solar panels would be exempt from state sales and use tax under a bill heard March 14 by the Revenue Committee.

LB456, introduced by Omaha Sen. Steve Lathrop, would create a sales and use tax exemption for machinery or equipment used to produce or store electricity generated by renewable energy sources including wind, solar, geothermal, hydroelectric, biomass and nuclear power.

Lathrop said wind energy projects create jobs, provide lease payments to landowners and generate tax revenue for local governments.

A current tax incentive in the Nebraska Advantage Act has encouraged wind energy companies to invest in the state, Lathrop said. Renewable energy companies participating in the program currently receive a sales and use tax refund on qualified property if they invest at least $20 million in the state. The program is set to end next year.

Lathrop said he would support a similar provision in any new incentive program, but said the sales tax exemption in LB456 would do more to help Nebraska compete for wind energy projects with neighboring states.

“What this bill offers us is an opportunity to stay in the game,” he said. “Sometimes the difference between sales tax incentives and no sales tax incentives could be the difference between taking a project and putting it in Nebraska or putting it in Kansas or Texas.”

David Bracht testified in support of the bill on behalf of NextEra Energy Resources, the Nebraska Chamber of Commerce and Industry and the Greater Omaha Chamber of Commerce. He said it boosts the state’s economy when companies such as Facebook build data centers here because of Nebraska’s abundant renewable energy resources.

Bracht said the proposed sales tax exemption would help Nebraska compete with other states that offer similar incentives. It also would treat renewable energy equipment the same as other manufacturing equipment, which is not subject to state sales tax, he said.

John Hansen, president of the Nebraska Farmers Union, also testified in support. He said a sales tax exemption might be more enticing to wind energy companies than the current sales tax refund, which is subject to availability.

For farmers who agree to have wind turbines on their property, Hansen said, the additional income makes a big difference in a time of low commodity prices. He said wind energy development also benefits rural communities by creating good-paying jobs with benefits.

“In rural communities … you can pretty much count on one hand the folks in town that make over fifty thousand bucks,” Hansen said. “There just aren’t very many of those kinds of jobs.”

No one testified in opposition to the bill and the committee took no immediate action on it.